Commodities

In: Business and Management

Submitted By terminator007
Words 8266
Pages 34
A PROJECT REPORT ON

COPPER: THE BROWN GOLD

Submitted to the Mumbai University in partial fulfillment of the requirement for the award of M.M.S. Degree

GUIDE
MR. SANJIV BARVE

by
SURESH CHANDRAN
MMS - FINANCE
ATHARVA INSTITUTE OF MANAGEMENT STUDIES
MALAD-MARVE ROAD, MALAD (WEST), MUMBAI 400095
BATCH 2006-2008

CERTIFICATE

This is to certify that the project entitled “COPPER: THE BROWN GOLD” is the bonafide work carried out by Mr. Suresh Chandran, student of M.M.S. Batch 2006-2008, Atharva Institute of Management Studies, during the year 2007-2008 in partial fulfillment of the requirements for the Post Graduate Degree of Master of Management Studies and that the project has not formed the basis for the award of any other degree, associate-ship, fellowship or any other similar titles.

Sd/-
Mr. Sanjiv Barve
Project Guide & Faculty Member
Atharva Institute of Management Studies

Date:
Place:

ACKNOWLEDGEMENT

I would like to take this opportunity to express my sincere and heart-felt gratitude towards my institute, Atharva Institute of Management studies for giving me this wonderful experience to guide my first steps into a Career in Finance.

I express my appreciation towards our Dean, Mr. N. S. Rajan, who believed in me and provided me with a great learning canvass to expand my perspectives and learning horizons.

I offer my sincerest thanks to my eternal academic guiding star, Mr. Sanjiv Barve, my project guide for his immense help. His guidance, constant inspiration and extended cooperation throughout the project duration have deeply assisted me in laying down a strong project framework.

Last but not the least I would like to thank my parents, friends, classmates, and family who have been an immense pillar of support in assisting me in achieving my objectives.

EXECUTIVE SUMMARY

This report talks about the affect of…...

Similar Documents

Commodity Trading

... TRADING IN COMMODITIES SUBMITTED TO: SUBMITTED BY: MS.PALLAVI DAWRA DEEPAK JASLEEN NEHA TASHNEET INTRODUCTION Commodity trading in India is regulated by the Forward Markets Commission (FMC) headquartered at Mumbai, it is a regulatory authority which is overseen by the Ministry of Consumer Affairs and Public Distribution, Govt. of India. It is a statutory body set up in 1953 under the Forward Contracts (Regulation) Act, 1952. COMMODITY TRADINGCommodity markets are quite like equity markets. The commodity market also has two constituents i.e. spot market and derivative market. In case of a spot market, the commodities are bought and sold for immediate delivery. In case of a commodities derivative market, various financial instruments having commodities as underlying are traded on the exchanges. It has been seen that traditionally in India people have hedged their risks with Gold and Silver. | COMMODITY FUTURESCommodity future is a derivative instrument for the future delivery of a commodity on a fixed date at a particular price. The underlying in this case is a particular commodity. If an investor purchases......

Words: 2241 - Pages: 9

Commodities

...differentiate commodity futures from stocks, bonds and other conventional assets. The article also explains in details the mechanics of investment in commodity futures and providing data on its historical returns in comparisons with other assets classes. The articles also elaborated the effects of inflation to commodity futures. Citation Gary Gorton & K. Geert Rouwenhorst (June 2000). Facts and Fantasies About Commodity Futures retrieved from: http://www.nber.org/papers/w10595 Introduction This review critically reviews the article ‘Facts and Fantasies About Commodity Futures which was retrieved from http://www.nber.org/papers/w10595.  The review will firstly summarize the article. Secondly, it will briefly analyze the effectiveness of the article’s structure, investigating how the information is set out and whether the reader can access it efficiently.  Thirdly, the review will critique the article, evaluating its accuracy, currency, relevance, objectivity and stability. The review will also judge the article’s accessibility and credibility. Overall the article was well written, clear and relevant. Brief Summary This articles was written to study simple properties of commodity futures as an asset class. Apart from explaining the mechanics of investment in commodity futures, the article explained the degree of relationship between spot and futures in term of return and risk. The article also elaborated in detail the different behavior between commodity......

Words: 773 - Pages: 4

Commodity vs Capital Fetishism

...Commodity Fetishism vs. Capital Fetishism Marxist Interpretations vis-à-vis Marx’s analyses in Capital Dimitri Dimoulis and John Milios Abstract In Marx’s analysis of the Capitalist Mode of Production and more precisely in his theory of value, the key to decipher the capitalist political and ideological practices and structures is to be found. In this context, many Marxists believed that the analysis of “commodity fetishism” in Section 1 of Volume 1 of Capital renders the basis for understanding ideological domination and political coercion under the capitalist rule. The authors argue, that “commodity fetishism” is only a preliminary notion, which allows Marx to arrive, in subsequent Sections of Capital, at the concept of the “fetishism of capital”. 1. Introduction From the days of his youth Marx was familiar with the statements of ethnographers on the subject of fetishism and used the term in his own writings.1 Equally important was in this context the influence of Hegel.2 In this paper we are not going to deal with the different meanings that the notion of fetishism acquires at different points of Marx’s work, an issue which is related to the various concepts of fetishism in political economy, political philosophy and the social sciences.3 We will focus on the analysis of commodity fetishism, in an effort to contribute to the comprehension of the different dimensions of this concept, especially in Marx’s Capital. For this purpose, we will pursue the following......

Words: 16098 - Pages: 65

Commodity Derivative Trading India

...ABSTRACT Commodity markets are important constituents of the financial market of any country. Similarly, commodity derivatives markets play a crucial role in price risk management as well as price discovery in any agriculture dominated economy like India. The present study is related with the derivative market in different commodities in India. The study has tried to describe about the various functions of commodity derivatives market like the players (hedgers, speculators, and arbitrages), the functions of a commodity exchange (NCDEX), clearing and settlement process and also the future potential of commodity derivatives. The role of the regulatory body (forward market commission) and its function is also being discussed. Also the recent development in the field of commodities derivative trading is also being discussed. This report also discuss the evolution of derivatives market in India and also deal with the derivatives like future, forward, swaps and options. Synopsis Commodity markets are an important constituent of the financial markets of any country. It is the market where a wide range of products, viz., precious metals, base metals, crude oil, energy and soft commodities like palm oil, coffee etc. are traded. It is important to develop a vibrant, active and liquid commodity market. This would help investors to hedge their commodity risk, take speculative positions in commodities and exploit arbitrage opportunities in the market....

Words: 2615 - Pages: 11

Branding of Commodities

...http://www.pdfmail.com BRANDING OF COMMODITIES By: Sumit Gupta MBA(IB)-2002-04 IIFT, New Delhi DATE: 2nd September, 2003 This document is created using PDFmail (Copyright RTE Software) http://www.pdfmail.com ABSTRACT By definition, commodities are products and services that customers perceive to be exactly the same. A market becomes a commodity market if the suppliers choose not to differentiate themselves, either through their products/services, or through their brands. Equally, any market can become a branded market if the suppliers choose to differentiate themselves. But companies that sell products such as bulk chemicals, paper, and steel or milk, salt, cement, etc. tend to emphasize operations and sales over marketing, striving to unload as much inventory as possible at the prevailing market price. Viewing themselves as commodity producers, they particularly overlook the nonfunctional features of their products—delivery speeds, aftersales service, distribution, Pricing, Customer servicing, Segmentation, Positioning and Communication. What these producers lose out on is the opportunity to increase their gross margins, create consumer demand for their specific items(s), and build valuable Brand Equity by employing the branding practices made successful by consumer packaged goods enterprises. The biggest challenge facing manufacturers today is how to differentiate their commodity so that their business rises above the commodity market place to enjoy the......

Words: 3607 - Pages: 15

Commodities and Commodity Derivatives

...FAO COMMODITY AND TRADE POLICY RESEARCH WORKING PAPER No.22 Threshold cointegration in the sugarethanol-oil price system in Brazil: evidence from nonlinear vector error correction models George Rapsomanikis and David Hallam1 Commodities and Trade Division Food and Agriculture Organization of the United Nations September 2006 1 The authors are Economist and Chief in the Trade Policy Service, Commodities and Trade Division. FAO Commodity and Trade Policy Research Working Papers are published by the Commodities and Trade Division of the Food and Agriculture Organization of the United Nations (FAO). They are working documents and do not reflect the opinion of FAO or its member governments. Also available at http://www.fao.org/es/ESC/ Additional copies of this working paper can be obtained from Olwen.Gotts@fao.org The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. All rights reserved. Reproduction and dissemination of material in this information product for educational or other non-commercial purposes are authorized without any prior written permission from the copyright holders provided the source is fully acknowledged.......

Words: 7956 - Pages: 32

Commodity Risk Assessment Plan

...Commodity Risk Assessment Plan The following provides guidance regarding the format and content of a risk assessment plan that should become part of a commodity strategy. Risk assessments can also be developed independent of commodity strategies. Section 1: This section includes an external intelligence report that describes in detail the supply market for the commodity/material. Who are the major suppliers and where are they located? Who are the major customers? What are the supply trends? Are there specific supply and demand price drivers? What is the overall competitive environment of the market for this commodity? The major suppliers are small, family-run cocoa farms in regions with tropical climate. Specifically, the primary growing sites consist of Americas, Asia and Africa, with a portion of 15%, 17% and 68%, respectively. Among them, Côte d'Ivoire in Africa is the largest producing country with a total 33% global supply volume. Usually, the cocoa beans are imported by direct purchase or through a broker. The ultimate major customers of cocoa are coffee and chocolate companies including Hersey, Godiva, etc. They are mainly from developed countries, whereas increasing markets exist in developing countries like China due to the growing middle class. With this stable demand growth, the total production for the past years has shown a growing tendency with a decreased increasing rate. Notably, due to the fluctuated weather patterns in recent years, it may pose......

Words: 1078 - Pages: 5

Aluminium Commodities

...25% | Construction | 25% | Packaging | 17% | Electrical | 12% | Machinery & equipment | 10% | Consumer durables | 6% | Other | 6% |     Every metal traded on the LME must conform to strict specifications regarding quality, lot size and shape. Each LME tradeable contract is likewise governed by rules covering (but not limited to) prompt dates, settlement terms, traded and cleared currencies and minimum tick size.    Contract specifications Law / Regulation  English Law, with regulation by the LME and the Financial Conduct Authority (FCA). This is a summary of the contract specifications. LME contracts may only be offered or sold to United States foreign futures and options customers by firms registered with the Commodity Futures Trading Commission (CFTC), or firms who are permitted to solicit and accept money from foreign futures and options customers from trading on the LME. * Physical Quality | Primary aluminium with impurities no greater than the chemical composition of one of the registered designations: * P1020A in the North American and International Registration Record entitled “International Designations and Chemical Composition Limits for Unalloyed Aluminum” (revised March 2007) * Al99.70 in the GB/T 1196-2008 Standard entitled “Unalloyed aluminium ingots for remelting”For warrants created up to and including 31 December 2009 primary aluminium of minimum 99.70% purity with maximum permissible iron content 0.20% and maximum......

Words: 1104 - Pages: 5

Commodity Research

...India, a country with a population of over one billion, has an economy based on agriculture, precious metals and base metals. Thus, trading in commodities provides lucrative market opportunities for a wider section of participants of diverse interests like investors, arbitragers, hedgers, traders, manufacturers, planters, exporters and importers. But surprisingly it has an under developed commodity market. The commodity market in India is in very nascent stage of growth. It taps only .4% of the markets. Hence shows huge scope of growth in future. This projects aims to throw light upon into this potential market. To brief about the evolution of commodity markets there is a look into the past giving the overview of the commodity market in India. Various commodities exchanges MCX AND NCDEX work for developing commodity market in India. Major reforms have been initiated in commodity futures markets in India in the last few years along with the analysis about the present scenario of commodity market in India. These efficient risk management tools insulate buyers and sellers from unexpected changes in future price movements. Understanding role the participants of future markets - hedgers, speculators and arbitragers. The second phase of the project deals with the Energy sector of the commodity exchange viz. Crude oil and its determinants in particular for in depth analysis. It includes fundamental analysis for crude oil. How the behavior of crude oil price has significant......

Words: 310 - Pages: 2

Commodity Swaps

...POLICY RESEARCH WORKING PAPER 1667 Dealing with Commodity Price Uncertainty Plantos Varangis Dont Larson Market liberalization has increased the appeal of commodity derivative instruments (such as futures, options, swaps, and commodity-linked notes)as a means of managing price uncertainty. many In emerging countries both government and the private sector are increasinglyusing these instruments. The World Bank International Economics Department Commodity Policy and Analysis Unit October 1996 POLICYRESEARCH WORKINGPAPER1667 Summary findings Liberalization in commodity markets has brought profound changes in the way price risks are allocated and managed in commodity subsectors. Price risks are increasingly allocated to private traders and farmers rather than absorbed by the government. The success of market reform depends on the ability of the emerging private sector to make full use of the available range of modern commodity marketing, price risk management (such as futures, options, swaps, commodity bonds, and so on), and financing instruments. Because farmers do not generally have direct access to these instruments, interinediaries must be developed. Larger private traders and banks are in the best position to become these intermediaries. Preconditions needed for accessing modern commodity marketing, price risk management, and financing instruments are: * Creating an appropriate legal, regulatory, and institutional framework. * Reducing......

Words: 4953 - Pages: 20

Commodity Sourcing

...Commodity Sourcing Our company is currently purchasing virgin olive oil from California and I was given the duty of finding other sources of the virgin olive oil. I went to the website www.comtrade.un.org to determine other countries that could supply us with virgin olive oil. Spain was noted to have the highest net weight of virgin olive oil that was exported. Italy was determined to be the 2nd in exports of virgin olive oil and Tunisia was noted to the 3rd. Greece was 4th, Portugal 5th and Syria was determined to be 6th. Based on this information, I would choose Spain and Tunisia as our suppliers. I would choose Tunisia first as my supplier based on the lowest price at $2.85 per kilogram of virgin olive oil. My second choice would be Spain because its price was slightly higher at $2.99 per kilogram of virgin olive oil. One factor that is not known is the amount of virgin olive oil that my company needs and is this amount needed more than Tunisia can provide us based on its other customers that the country supplies. I would still try to obtain as much of virgin olive oil from Tunisia and then turn to Spain as my supplier since it is the largest world provider of virgin olive oil in 2010. Retrieved from www.comtrade.un.org Appendix: Reporter | Trade Value ($) | Net Weight (kg) | Price (Value/Weight) | Spain | 1,959,673,259 | 654,404,347 | 2.99 | Italy | 1,170,009,198 | 263,984,408 | 4.43 | Tunisia | 282,132,260 | 99,045,795 | 2.85 | Greece | 262,699...

Words: 297 - Pages: 2

Forecasting of Commodity Prices

...Forecasting and Analyzing World Commodity Prices René Lalonde* Principal Researcher International Department Bank of Canada Zhenhua Zhu Economist Research Department Bank of Canada October 18, 2002 Frédérick Demers** Economist Research Department Bank of Canada Abstract This paper develops simple econometric models to analyze and forecast three components of the Bank of Canada commodity price index (BCPI), namely non-energy commodity prices (BCNE), the West Texas Intermediate crude oil price (WTI), and other energy prices. In the paper, we present different methodologies to identify transitory and permanent components of movements in these prices. A structural vector autoregressive (SVAR) model is used for real BCNE prices, a multiple structural-break technique is employed for real crude oil prices, and an errorcorrection model is constructed for real prices of other energy components. Then we use these transitory and permanent components to develop forecasting models. We assess our models’ performance in various aspects, and our main results indicate: (a) for real BCNE prices, most of the short-run variation is attributed to demand shocks, (b) the world economic activity and real U.S. dollar effective exchange rate explain much of the cyclical variation of real BCNE prices, (c) real crude oil prices have two structural breaks over the sample period, and their link with the world economic activity is strongest in the most recent regime, (d) real prices of other energy......

Words: 9822 - Pages: 40

Commodity Derviatives in India

...Commodity Derivatives Market in India: Development, Regulation and Future Prospects Introduction The Indian economy is witnessing a mini revolution in commodity derivatives and risk management. Commodity options trading and cash settlement of commodity futures had been banned since 1952 and until 2002 commodity derivatives market was virtually nonexistent, except some negligible activity on an OTC basis. Now in September 2005, the country has 3 national level electronic exchanges and 21 regional exchanges for trading commodity derivatives. As many as eighty (80) commodities have been allowed for derivatives trading. The value of trading has been booming and is likely to cross the $ 1 Trillion mark in 2006 and, if all goes well, seems to be set to touch $5 Trillion in a few years. Chequred History The history of organized commodity derivatives in India goes back to the nineteenth century when the Cotton Trade Association started futures trading in 1875, barely about a decade after the commodity derivatives started in Chicago. Over time the derivatives market developed in several other commodities in India. Following cotton, derivatives trading started in oilseeds in Bombay (1900), raw jute and jute goods in Calcutta (1912), wheat in Hapur (1913) and in Bullion in Bombay (1920). However, many feared that derivatives fuelled unnecessary speculation in essential commodities, and were detrimental to the healthy functioning of the markets for the underlying......

Words: 3982 - Pages: 16

Essential Commodities Act..B.E

...Essential Commodities Act, 1955 The EC Act, 1955 gives powers to control production, supply, distribution etc. of essential commodities for maintaining or increasing supplies and for securing their equitable distribution and availability at fair prices. Using the powers under the Act, various Ministries/Departments of the Central Government have issued Control Orders for regulating production/distribution/quality aspects/movement etc. pertaining to the commodities which are essential and administered by them such as foodgrains, edible oils, pulses kerosene, sugar etc. The Central Government regularly monitors the action taken by State Governments/UT Administrations to implement the provisions of the Essential Commodities Act, 1955. The items declared as essential commodities under the Essential Commodities Act, 1955 are reviewed from time to time in the light of liberalized economic policies in consultation with the Ministries/Departments administering the essential commodities. At present the list of essential commodities contains 15 items in which Foodstuffs, including edible oilseeds and oils are under Item no.6 of the List. Powers to control production, supply, distribution, etc., of essential commodities[11]— (1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity for the defence of India or the efficient conduct of military operations, it may, by order, provide for......

Words: 494 - Pages: 2

Indian Commodity Market

...The Indian commodity futures volumes have grown 5.5 times from Rs.20.53 trillion in 2005-06 to Rs.112.52 trillion in 2010-11. Currently, the average monthly volume on the Indian commodity exchanges is Rs.6 trillion. MCX leads the industry, followed by NCDEX. MCX is not only number one in India but has achieved some global milestones too. It was the largest exchange in silver (in terms of number of futures contracts traded in 2010), number two in gold, copper and natural gas and number three in crude oil. When we say India is the largest exchange in silver, it is a great achievement for the Multi Commodity Exchange. Talking about agricultural commodities, the Indian commodities market has futures contracts of commodities such as black pepper, cumin seed, mentha oil and many more which are internationally traded but only listed in India; internationally traders tend to consider these as benchmark rates. Though it is at a nascent stage, the volumes in the Indian commodities market have a different story to tell. From Rs.20 trillion, the volumes have reached Rs.112.52 trillion in FY10-11. When we see this kind of a spurt in volumes, we must remember that it has primarily been a futures market, without Options. Foreign institutional investors, domestic institutions, banks and insurance companies are not allowed to trade on the Indian commodity bourses and a majority of volumes come from jobbers, arbitrageurs, retail traders and small scale enterprises and corporates (for......

Words: 838 - Pages: 4